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HFT
(High-Frequency Trading)
HFT (High-Frequency Trading) is an algorithmic trading strategy that uses powerful computers to execute large numbers of orders at extremely high speeds, often in milliseconds or microseconds. HFT firms capitalize on tiny price discrepancies and market inefficiencies.
Accounting for about 50% of U.S. equity trading volume, HFT has transformed modern markets by increasing liquidity but also raising concerns about market stability. Strategies include market-making, arbitrage, and latency exploitation. Controversial practices like "flash orders" and "spoofing" have led to increased SEC and CFTC oversight. While HFT reduces bid-ask spreads, critics argue it may disadvantage traditional investors and contribute to events like the 2010 Flash Crash.
Accounting for about 50% of U.S. equity trading volume, HFT has transformed modern markets by increasing liquidity but also raising concerns about market stability. Strategies include market-making, arbitrage, and latency exploitation. Controversial practices like "flash orders" and "spoofing" have led to increased SEC and CFTC oversight. While HFT reduces bid-ask spreads, critics argue it may disadvantage traditional investors and contribute to events like the 2010 Flash Crash.